Semiconductor chips shortages impact June’s sales figure of Ford Motors


  • Ford Motor reported sales of 475,327 vehicles during the June quarter, up by 9.6% from PCP.
  • The U.S automaker had set a sales target of 519,007 vehicles for the second quarter.
  • The global semiconductor chip shortage led to significant production cuts and a low inventory of vehicles.
  • F-series pickup registered the highest dip in sales by 30% in the June quarter.

The global shortage in semiconductor chips weighed in vehicles sales of major U.S automakers during the June quarter. As a result, the second-largest U.S vehicle manufacturer- Ford Motor Company (NYSE:F) reported auto sales of 475,327 units during the second quarter of 2021. The sales figure is up by 9.6% from the previous corresponding period (PCP).

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The main reason: Chip shortages

The auto industry worldwide is facing acute shortages of semiconductor chips. It is impacting the roll-out of vehicles numbers, and manufacturing plants are working on reduced capacity. The semiconductor chip is used in vehicles for microprocessors and transistors to function properly.

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The supply shortages of semiconductors have been in the news for quite some time now. The demand for high-end electrical gadgets and gears is bolstering, leading to increased demand for chips at an alarming rate. Mobile phones, laptops, gaming consoles, and other smart devices use semiconductor chips extensively. The ongoing shortage is attributed to the rise in demand, although the supply-side not picking up at the same pace.

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After the dismal performance of the auto industry in 2020, the automakers witnessed strong demand. Moreover, people are abstaining from using public transport system due to the fear of COVID-19, sales of cars thus are picking up.

Although the Electric Vehicle demand surpassed all estimates, the shortage for many critical pieces of equipment, including the semiconductor chips, is leading to its delay.

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The U.S companies control 47% of the global semiconductor market. The supply chain was strangled in 2020 when demand for vehicles dipped significantly. The automakers placed very low orders of semiconductor chips which forced the suppliers to trim their production. The demand in 2021 has shoot-up unexpectedly, and the manufacturers were not ready to face such colossal demand creating a backlog in supplies.

Shortage to continue in July too

Ford had earlier said that it could lose half of its production to the chip shortage. The Company reiterated its position on auto manufacturing and said the company might have to cut its production additionally for July. General Motors, the country's largest carmaker, also faces the chip shortage issue, and inventories are dipping, impacting the sales figure.

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Sales of EV picking up

Ford posted a 117% rise in sales of electric and hybrid vehicles. The Company sold 12,975 of its Mustang Mach-E SUV during the June quarter. The electric F-150 Lightening model reservation is picking up and crossed 100,000 in just two months. F-150 lightening is all set to hit the market in 2022.

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The sales figure did not meet the expectation of the market. The share price of Ford Motor gained only 0.13% on Friday, 2 July 2021.

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